Lithia & Driveway (Lad) Increases Revenue 60%, Eps 36%, And Adjusted Eps 109%, Record Fourth Quarter Performance

ANNOUNCES DIVIDEND OF $0.35 PER SHARE FOR FOURTH QUARTER

MEDFORD, Ore., Feb. 9, 2022 /PRNewswire/ — Lithia & Driveway (NYSE: LAD) today reported the highest fourth quarter revenue and earnings per share in company history.

Fourth quarter 2021 revenue increased 60% to $6.3 billion from $3.9 billion in the fourth quarter of 2020.

Fourth quarter 2021 net income attributable to LAD per diluted share was $9.57, a 36% increase from $7.02 per diluted share reported in the fourth quarter of 2020. Adjusted fourth quarter 2021 net income attributable to LAD per diluted share was $11.39, a 109% increase compared to $5.46 per diluted share in the same period of 2020.

Fourth quarter 2021 net income was $293 million, a 56% increase compared to net income of $188 million in the same period of 2020. Adjusted fourth quarter 2021 net income was $348 million, a 138% increase compared to adjusted net income of $146 million for the same period of 2020.

As shown in the attached non-GAAP reconciliation tables, the 2021 fourth quarter adjusted results exclude a $1.82 per diluted share net non-core charge related to a non-cash unrealized investment loss, acquisition expenses and insurance reserves, partially offset by a net gain on the sale of stores. The 2020 fourth quarter adjusted results include a $1.56 per diluted share net non-core benefit related to a non-cash unrealized investment gain, a net gain on the sale of stores, partially offset by acquisition expenses.

Fourth Quarter-over-Quarter Comparisons and Operating Highlights:

• Revenues increased 60.1%
• New vehicle retail revenues increased 37.7%
• Used vehicle retail revenues increased 82.1%
• 1,650 Driveway transactions in the month of December, exceeding the 1,250 transaction or 15,000 annual run-rate goal
• F&I per unit increased 23.3% to $2,125
• Service, body, and parts revenues increased 58.3%
• Total vehicle gross profit per unit increased 57.4% to $6,882
• Adjusted SG&A as a percentage of gross profit improved by 520 basis points from 62.0% to 56.8%

“Strong performance across all business lines drove a record $11.39 in adjusted earnings per share for the fourth quarter,” said Bryan DeBoer, Lithia & Driveway’s President and CEO. “Whether it was our stores increasing used vehicle volumes and service, body, and parts revenues by double digits, Driveway out-performing its December targets, or accelerated growth in Driveway Finance funded by our first ABS transaction, our synergistic businesses are a capital engine, providing significant profitability and flexibility for the road ahead.”

Full year 2021 revenue increased 74% to a record $22.8 billion from $13.1 billion in 2020.

Full year 2021 net income per diluted share increased 87% to $36.54 from $19.53 for 2020. Adjusted net income per diluted share increased 120% to $40.03 from $18.19 for 2020. Full year 2021 net income increased 126% to $1.1 billion from $470 million for 2020. Adjusted net income increased 166% to $1.2 billion for 2021 from $438 million for 2020.

As shown in the attached non-GAAP reconciliation tables, the 2021 adjusted results exclude a $3.49 per diluted share net non-core charge related to a non-cash unrealized investment loss, acquisition expenses, the redemption of senior notes, insurance reserves and an asset impairment. The 2020 adjusted results exclude a $1.34 per diluted share net non-core benefit related to a non-cash unrealized investment gain, a net gain on sale of stores, and tax attribute, partially offset by asset impairments, insurance reserves and acquisition expenses.

Full Year-over-Year Operating Highlights:

• Record full year revenues of $22.8 billion
• Used vehicle retail sales increased 81.5%
• F&I per unit increased 19.8% to $1,960
• Total vehicle gross profit per unit increased 38.4% to $5,855
• Adjusted SG&A as a percentage of gross profit improved by 730 basis points to 57.2%
• Driveway Finance completed its inaugural ABS offering and scaled portfolio to over $700 million

Corporate Development
In the fourth quarter, we completed several acquisitions expected to contribute $700 million in annualized revenue. To date in 2022, we acquired three stores from the Sullivan Auto Group. Roseville Toyota, one of the highest volume Toyota stores in the US, along with John L. Sullivan Chevrolet, and John L. Sullivan CJDR build out our brand footprint in the Sacramento, CA market. Collectively the stores are expected to generate $700 million in annualized revenue.

“Since the launch of our 2025 Plan 18 months ago, we have acquired over $11 billion in annualized revenue,” said DeBoer. “Increasing our network fuels Driveway’s growth, our overall size and scale and ability to further expand our competitive advantages in used vehicle procurement, reconditioning, and logistics. LAD’s reputation in the marketplace and the magnitude of the deal pipeline makes us confident in our ability to strategically expand our network while meeting our disciplined return thresholds.”

Balance Sheet Update
We ended the fourth quarter with approximately $1.5 billion in cash and availability on our revolving lines of credit. In addition, our unfinanced real estate could provide additional liquidity of approximately $1.0 billion.

Dividend Payment and Share Repurchases
Our Board of Directors approved a dividend of $0.35 per share related to fourth quarter 2021 financial results. We expect to pay the dividend on March 25, 2022 to shareholders of record on March 11, 2022.

During the fourth quarter, we repurchased 756,883 shares or approximately 2.5% of shares outstanding, at a weighted average price of $283.75. To date in 2022, we have repurchased approximately an additional 154,923 at a weighted average price of $283.89. Under our current share repurchase authorization, approximately $679 million remains available.